On September 28, 2010, the Southern District of Florida awarded summary judgment to New Hope Power Company in its suit seeking to enjoin the U.S. Army Corps of Engineers (ACOE) from applying rules pertaining to its regulatory jurisdiction over certain former wetlands, which had been issued through agency memoranda. The court held that the agency had failed to properly promulgate the rules through the notice-and-comment rulemaking procedures required under the Administrative Procedure Act (APA). The decision has wide import, as it directly affects approximately 700,000 acres within the Everglades Agricultural Area (EAA), and other hydrologically managed lands nationwide for which non-agricultural uses may be proposed. SPR represented New Hope Power Company in the suit.
New Hope owns and operates a renewable energy facility in the EAA, an area of the Florida Everglades that was formerly wetlands but has been hydrologically managed through pumps and drainage systems since the mid-20th century to allow for agriculture. New Hope’s facility, constructed on former sugarcane fields, generates electric power through the burning of non-usable portions of sugarcane as well as wood waste. New Hope recently obtained state and local permits to construct a monofill on neighboring land, currently farmed for sugarcane, where it could place ash from the waste-burning operations, and thereby avoid trucking the ash to a distant landfill.
Existing ACOE regulations under the Clean Water Act provide that a permit is needed to conduct certain activities within wetlands. However, exempt from the definition of wetlands are lands that do not support wetlands vegetation under normal circumstances. The ACOE had in past rulemaking documents explained that “normal circumstances” was not to be read to include properties that had been transformed into dry land. Also exempt from regulations are “prior converted croplands,” lands formerly wetlands but converted to agricultural use. Rulemaking documents previously issued by the ACOE provided that a prior converted cropland could only lose such designation if wetland vegetation returned. In 1993, the ACOE had determined that the land on which New Hope’s power facility is built was prior converted cropland. In addition, the ACOE’s Wetlands Delineation Manual provides that in order to be a regulated wetland, land must exhibit both wetlands hydrology and vegetation, unless one of three types of “atypical situations” apply: (1) an unauthorized activity resulting in the loss of one of these characteristics; (2) man-made creation of a wetland; or (3) natural events.
However, in 2009, the ACOE issued internal memoranda interpreting “normal circumstances” in hydrologically managed lands to mean “pumps off,” and stating that prior converted croplands lost such designation upon a change to non-agricultural use. Based on these memoranda, the ACOE informed New Hope that it would likely need a permit to construct the proposed monofill. New Hope filed a lawsuit challenging the memoranda as legislative rules that the ACOE had failed to promulgate in accordance with the APA. The court agreed, holding that the memoranda extended the ACOE’s regulatory jurisdiction beyond that provided for in existing regulations, and diverged from the Wetlands Manual in deeming lands hydrologically managed with ACOE authorization an “atypical situation” to which the general delineation rules did not apply. The court therefore enjoined the ACOE from applying these new rules.